Fewer foreign investors are funding U.S. retail

Inbound capital to the U.S. dropped 34 percent year over year in the first half of 2020, as global uncertainty from the pandemic stymied investment activity, according to CBRE. Retail was hit hard. Foreign investment in the sector decreased 42 percent to $650 million, the lowest amount since 2009. All commercial real estate sectors posted significant declines except industrial, which posted a 15 percent increase.

Capital from Europe and the Middle East, by far the leading source, plummeted 48 percent. Capital from Latin America, by far the smallest source, plunged by 84 percent. Canada investment into the U.S. shrank by 22 percent and Asia-Pacific investment by 10 percent.

The year had been off to a strong start before lockdowns set in. Inbound capital in the first quarter was high enough to partially offset second-quarter declines. First-quarter volume mitigated first-half decreases, but second-quarter investment into the U.S. dropped by 70 percent year over year, according to CBRE.

Meanwhile, U.S. capital outflows were essentially unchanged from the first half of 2019, but 80 percent of that volume was deployed in the first quarter.

Retailer bankruptcies so far this year

Thirty-four shopping center tenants have filed for bankruptcy protection this year as of March 8, including Alamo Drafthouse Cinema and Paper Source. It’s a slight increase from years past.

Apparel sales update

Almost 75 percent of U.S. apparel sales were made online last month, up from 47 percent a year ago, according to Mastercard. Total apparel sales declined 5.3 percent for the month, the credit card company says.

LIBOR’s last day is set

International regulators are phasing out the LIBOR, or London Interbank Offered Rate, index against which many short-term interest rates are pegged. They are advising banks to stop writing new LIBOR loans on Dec. 31. Financial markets will need to transition loans pegged to LIBOR to the transaction-based SOFR, or Secured Overnight Financing Rate, index. The shift has been planned for some time, but regulators like the U.K.’s Financial Conduct Authority finally have set the date of June 30, 2023, after which LIBOR no longer officially will be acknowledged.

7 retailer updates

Amazon has opened 11 Amazon Fresh grocery stores in the U.S. since September and plans to open 28 more across the country. The online behemoth wants to capitalize on customers it gained during the pandemic and compete against Walmart and Whole Foods. The Amazon Fresh stores do not feature the cashierless technology made famous by the company’s smaller Amazon Go stores.

Women’s accessories retailer Charming Charlie is back in business after liquidating two years ago, and it plans to open 14 stores this month and next. Last September, the chain opened its first new store in two years, in Atlanta. Since then, it’s opened six more, in Santa Monica, California; Gilbert, Arizona; Towson, Maryland; Columbia, Maryland; Ridgeland, Mississippi; and Providence, Rhode Island. The 14 new stores will bring the retailer’s total to 21.

Healthy and natural supermarket chain Sprouts Farmers Market will open 20 stores this year, including four in a smaller format averaging 25,000 square feet.

Strong omni-channel infrastructure helped Dick’s Sporting Goods capitalize on shifts in consumer demand across golf, outdoor activities, home fitness and active lifestyle goods, generating a 9.9 percent increase in same-store sales in 2020. Digital sales helped drive the growth, as e-commerce sales climbing 100 percent for the year. Digital sales made up 30 percent of total net sales in 2020, up from 16 percent for the 52 weeks that ended Feb. 1, 2020. The company fulfilled 70 percent of its online orders in the fourth quarter through its stores, helping cut delivery time and expense. It expects to open six new Dick’s Sporting Goods stores and six specialty concept stores in 2021.

The new owners of the defunct Lord & Taylor department store chain plan to revive the brand as an e-commerce-only operation in April, after liquidating all stores two years ago.

Meanwhile, conglomerate HBC plans to split its Saks Fifth Avenue physical store operations and its e-commerce site into two companies in preparation for a possible IPO of the e-commerce side.

On Thursday, Irish fast-fashion chain Primark opened its first Chicago store in the former Gap and Old Navy stores on State Street. The store brings Primark’s total U.S. store count to 12.

This time last year

Here’s what SCT was talking about a year ago this week.

Hazy picture of cannabis cafes’ future
There’s a cannabis restaurant in California
U.S. retail sales rose year-over-year in February
What the tenants are up to
Who’s building what, where
Who’s paying how much for what

Résumé updates

RioCan promoted Andrew Duncan to the new position of chief investment officer, effective April 1, to oversee the REIT’s 42 million-square-foot development pipeline and investment transactions. Duncan joined RioCan in 2013 and became senior vice president of development soon after, helping oversee development of downtown Toronto’s The Well.

The latest retail real estate developments

Thanks to $7.4 million in tax increment financing from the Des Moines, Iowa city council, the blighted Southridge mall is undergoing a $13.5 million redevelopment that includes conversion of a former Sears into a Genesis health Clubs location and a former Toys R Us into a U.S. Veterans Affairs outpatient clinic.

Monmouth Medical Center and Children’s Specialized Hospital will build an 84,000-square-foot, four-level clinic at Brookfield Properties’ Monmouth Mall, in Eatontown, New Jersey. Grand opening is scheduled for this year.

Developers want to rezone Phoenix’s Christown Spectrum mall for mixed-use development that would meld residential, commercial, retail and entertainment and could include a hotel and green spaces in a walkable block-style format. PetSmart, Ross Dress for Less, Target and Walmart are tenants.

Berkley, The Foxfield Co. and Sembler are kicking off development of Covington, Georgia’s 180-acre, mixed-use Covington Town Center with a first phase that includes a 63,000-square-foot, Publix-anchored retail center opening in spring of 2022.

Sembler also is developing The Mill, a 46-acre mixed-use complex, in Myrtle Beach, South Carolina. A freestanding, 47,000-square-foot Publix will anchor the project’s retail portion, to be known as Marketplace at The Mill, which also will include two additional buildings totaling nearly 20,000 square feet of small shop space and seven outparcels. The Mill also will include a luxury apartment community with 290 units. Construction starts this summer and is estimated to be done in summer 2022.

Work has begun on the 13,250-square-foot Phase 1 of the 20,130-square-foot Shops at Creekside in Frisco, Texas. Construction will begin in April on the 6,880-square-foot Phase 2, which will be a separate building. Domino’s, Sweetwaters Coffee & Tea and a dentist have signed on as tenants at the property, which is near a new University of North Texas campus.

Harper Associates plans to add a drive-thru Chipotle restaurant and 36 townhomes to its Publix- and Target-anchored Shops at Stratford Hills in Richmond, Virginia.

Baker Katz broke ground on the 163,518-square-foot first phase of the 50-acre Brenham Crossing in Brenham, Texas. Tenants at the center, which opens next year, will include Burke’s, Five Below, Hobby Lobby, Marshalls and PetSmart.

Developers are launching Phase 3 of the five-phase redevelopment of Bethlehem, Pennsylvania’s 55-year-old Westgate Mall. The phase includes the renovation of a freestanding building to accommodate a credit union and the building of a new freestanding building for a fast-food restaurant. Rite Aid, Sky Zone Trampoline Park and Weis currently anchor the center.

Georgia’s Henry County board of commissioners approved the construction of a $22 million aquatics center at Stockbridge, Georgia’s Bridges at Jodeco, a proposed mixed-use complex with retail, restaurants, housing and walking paths.